Focus on relationships to drive commercial value

Procurement professionals should focus on relationships to drive commercial value for their businesses, experts agreed at a CIPS event.

Speaking at the “Contracting and Procurement: The Commercial Powerhouse” event, hosted by Shell in London, procurement adviser and writer Dick Russill urged practitioners to think about relationships to drive change and add value.

“Proper transformation involves changing relationships with a lot of different communities,” he said. “There’s a limit of what procurement can do by itself. You need internal stakeholders to back you, collaboration across the supply chain and management to commit to providing resources.”

Chris Howe, building procurement director at Heathrow, said the airport was playing “the relationship long game” with its suppliers. The airport scored a hat trick at the 2016 Supply Management Awards.

Howe revealed that Heathrow recently signed a 12-year contract with some security suppliers and that it was encouraging firms throughout the supply chain to work together in the spirit of “professional collaboration”. Heathrow asks suppliers to sign up its ‘Working Together’ charter to encourage this.

“Unless you can tap into the discretionary effort of your suppliers and the individuals that work for them, you won’t leverage what you need from the contract, all of the time,” Howe said.

To support expansion – the government approved plans for a third runway at Heathrow in October 2016 – Howe said the airport was setting up six regional hubs across the UK to boost local businesses.

Senior supplier manager at Marshall Aerospace and Defence Andrew Smith spoke about internal relationship management and how his procurement team have learned to best support internal stakeholders.

“The buyer of the future needs to be more commercial, financial and have project management and business development skills,” he said. “Those people don’t grow on trees.”

To make sure procurement was involved early on in the decision-making process, Smith said the firm had been giving its supply management professionals monthly competency training, particularly focused on ‘soft skills’.

“It’s about translating what procurement needs to do to support wider business objectives,” he said. “Engagement is key, with stakeholders and within the function. We need to make sure we provide people with the skills [they need to manage relationships] and make sure we communicate.”

At Marshall Aerospace and Defence each support function is rated via a quarterly ‘customer satisfaction survey’. “Supply chain has one of the highest marks as a function,” Smith said.

Craig Simpson, VP of group functions and technology at Shell, agreed that developing procurement capability was important. “Key to becoming a commercial powerhouse is developing relationships early, identifying opportunities early, and driving change throughout the supply chain,” he said.